MVNOs see vertical expansion opportunities in Asia with 5G

February 8, 2023
5G is here. With it comes the ability to bring into our lives things that we could only imagine before 5G - smart cities, Industry 4.0, greater mobility, and extended reality (XR) applications. While 5G is creating huge impacts worldwide, Asia is poised to be at the forefront of 5G-driven growth as they bring together a unique combination of factors that make it an ideal hub.

As a result, MVNOs will explore opportunities to add new verticals into their solution offerings engaging with their customers even closer.

While MNOs will likely focus their efforts on expanding their 5G footprints and serving enterprise business clients at a wholesale telecom backbone level, MVNOs, with their ability to be nimble, apply targeted marketing, and focus on key niches, will see many growth opportunities in the coming years.  One of those areas is in the evolving extended reality (XR) market.

What is XR and why is it important?

Marketsand Markets estimates the Extended Reality (XR) market, consisting of AR, VR and MR, is expected to grow to $125.2 billion USD by 2026, CAGR of 30.6% from 2021 and 2026.  To date North America has seen the largest growth, mostly driven by the XR device market, primarily on the consumer side, with gaming and sports entertainment being the major players.

Extended Reality (XR) encompasses the continuum from the physical world to the fully virtual/digital world.  While most people are familiar with and talk about AR and VR, MR and XR often are left out of the discussion.

Augmented Reality (AR) is where digital elements are overlaid onto the real world without interaction between the two.  An example of this is IKEA Place app that enables its customers to drag and drop virtual IKEA furniture pieces into their rooms using their smartphones’ camera.  With products scaled up or down to fit the actual room in one's house, it essentially overlays digital representations into real world environments.  In the gaming world it is best known through the Pokemon Go AR game where users capture hidden monsters geolocated in the real world.

Mixed Reality (MR) is like AR but where both the real world and digital world elements can interact.  This is still an emerging technology with few applications, but we can see an example of it in use with Microsoft’s HoloLens where multiple people can interact in a physical space with a virtual element.  This is being used by Case Western University in medical education for a more immersive experience that delivers more effective training results.

Virtual Reality (VR) removes the physical environment and is fully digital but hacks the physical senses through digital means.  Instead of projecting digital elements into the physical world, you’re transported into a virtual environment (a metaverse) where physical limits are removed.  This is the direction Facebook went when they changed their name to Meta.  But nowhere is this gaining better traction than in the gaming industry, where VR is enabling gamers to play in immersive, realistic, 3-D worlds.  While still in its infancy, VR has tremendous upside – today even popular non-VR games, like Minecraft, are testing the waters (Minecraft VR).

Asia is primed to adopt this new technology, starting with the gaming industry.

While much of the development in AR has been focused on the North American market to date, the APAC region is where rapid expansion and integration of XR technology, primarily around VR will likely emerge.

APAC is the epicenter of the $197 billion USD gaming industry as of 2022.  With over 3 billion gamers worldwide, over half are in APAC.  As such, it is a center for gaming innovation and a launchpad for new trends.  Coupled with that is the expected rapid increase of APAC smartphone users by 729 million users (24% increase) by 2028.  With 5G coming online, Asia is a likely benefactor as MVNOs tackle XR technology beginning with the gaming sector.

While headset equipment technology is more diversified globally, the overall gaming market has strong roots in APAC.  Japan, with PlayStation and Nintendo, are legacy leaders in console gaming hardware.  Meanwhile, China’s Tencent Games generated over $2 billion USD in 2021 mobile gaming revenues.

Gamers spend an average of 16 hours a week playing games, 8 hours watching or joining game streams, and 6 hours checking game forums and communities.  As they play mobile, social, cloud and eSports-based games, using platforms like Discord, Twitch and YouTube and attend eSports events, MVNO opportunities to support the gaming industry will emerge.  Gamers will demand core computing power to handle more and more data-heavy games and will also increasingly use their mobile devices for VR games that require the mobile bandwidth and latency levels that MVNOs leveraging 5G can provide.

A survey of gamers in Singapore, Japan, and Korea showed engaging gameplay, reliable and consistent network quality, and low latency were their top 3 requirements.  With the gaming industry evolving into the cloud ecosystem, high bandwidth connectivity and low latency/ jitter – features of 5G, edge cloud, and cloud gaming are the future.

Asian brand development model highlights how XR verticals may develop.

With XR technology and 5G rollouts just beginning, which companies will take the lead, especially in the telecom sector that will be supporting this growth, and how companies view and develop their brands in Asia, will determine who captures this emerging market share.

Asian companies tend to more heavily value investment in tangible assets, like manufacturing capacity and property, rather than intangible assets such as intellectual property, proprietary technologies and products, systems and brands.

Between one-third and 50% of Asian companies’ market value are in the intangibles versus over 75% in the West.  And those companies own the most well-known brands.

Asian companies often apply discounts and sales which can undermine their brands. As a result, only a handful of larger companies have strong brands.

Branding in Asia is often considered a cost center where the focus is on advertising efforts and surface-level changes like company logo, design style and color schemes.  Immediate results are expected and often fall flat in global market where a more strategic and long-term approach to brand building is needed.

MVNOs are poised to lead XR and other 5G technology-driven verticals.

While big company brands in Asia will still dominate the landscape, MVNO’s, who can adapt and launch into markets more quickly with a digital brand, are likely to make inroads in the fast-moving 5G landscape, starting with mobile gaming while also supporting other applications that leverage this technology. MVNOs are seeing a global 5G market of $9.1 billion by 2027 which should support healthy competition in this arena.  Here’s some of the potential industries that will be disrupted by XR technology, where MVNOs will likely see opportunities to expand into new verticals.

Gaming.  MVNOs can power better XR gaming experiences with superior 5G connectivity where users can access digital content when on the move.  These operators will be able to better support the companies that drive the metaverse, as well as ensuring fast, jitter-free connections, delivering targeted ad campaigns, and better maintenance and support for businesses competing in the gaming space.

Training.  XR technology will significantly evolve the employee training industry as 3D virtual training systems get built out that leverage the speed and flexibility that 5G provides.  Enhanced training environments will be developed that simulate real-world situations. Using these training scenarios, companies can provide their teams with the skills they need to use, maintain, and repair complex machinery and equipment.  This training will include everything from the medical training already happening at Case Western with the GoogleLens technology, to maintenance, repair and inspection services.

In addition to technical training, this technology can be used for customer service rep training scenarios, demonstrating effective approaches to customer interactions in sales and service-based situations, creating many opportunities in call center environments.  Tools can also be developed to track and improve training outcomes and iterate those training strategies.

Remote Field Support.  Many industries have field technicians who perform technical work away from company offices and require mobile technology to support them.  This industry has already evolved dramatically as field technicians employ digital tablets with cellular connections.  They track everything from logging arrival and completion times, to taking photos or videos of a broken part, ordering the part online, and getting the customer’s signature and payment information, all before leaving the site.  Field techs can use MR and AR glasses to connect with remote expert troubleshooters so that they can solve problems on the spot and not be limited by any one employee’s expertise.

triPica helps MVNOs launch digital brands

With XR technology and 5G networks advancing at a rapid pace, MVNOs need to keep pace with this technological evolution without delay while delivering valued services for their customers.  Having a reliable network backbone is a key part but being able to use this backbone and monetise from it by delivering the full customer experience, aligned with their unique brand, is equally important.  triPica’s BSS solution helps MVNOs launch their digital telco brand within 4 months and quickly gain market share.